Setting the Example
The decision by the U.S. EPA to deny a waiver on the renewable fuel standard (RFS) was the right decision. With this statement I will probably only echo what many colleagues in or related to the ethanol sector have said already. Clearly, the decision is good news for the American ethanol sector, but it should also be important for those who design policy and adopt laws at the other side of the pond in Europe.
The EPA decision gave at least two clear messages to those who favored the waiver and to the rest of the world: First of all, the food/fuel issue was greatly exaggerated, and secondly, the RFS has an in-built flexibility that makes a waiver on the mandate unnecessary. The EPA officials were able to distinguish fact from fiction when they made their assessment on the impact of ethanol production on commodity prices, the food and the feed market.
Hopefully, European regulators will take note of what has happened. If they are intellectually honest, they should acknowledge that if the U.S. biofuel policy has no real negative impact on the food/feed market, then surely the European policy cannot have any impact at all. Compared to the U.S. volumes, the European volumes are simply too small to have any significant impact. Even the estimated volumes for 2020 are small, comparable in size with today’s ethanol production in the U.S. Unfortunately, EU regulators seem to be under the spell of Big Food and the self-righteousness NGOs no one seems to question.
I have always wondered why there is this anxiety in the EU around food.
Europe has become the biggest food importer in the world since it reformed the European Common Agricultural Policy. This reform was partly the result of international trade agreements. Land the size of Germany (35 million hectares, or 86 million acres) is needed outside Europe to feed Europeans. The result is that Europe has taken arable land out of production year-on-year and we have created a huge protein deficit. It is not that we couldn’t produce these proteins ourselves, but we cannot do it competitively with soymeal. As the EU common agricultural policy no longer allows production support for farmers, we have no other option but to import protein, importing 35 million metric tons of soymeal annually to feed animals.
We reduced arable land use in Europe for another reason. In 2006, under pressure of a World Trade Organization ruling, Europe reduced its sugar production by 6 million tons, equal to 700,000 hectares. A total of 83 sugar refineries had to be closed. Europe was restricted in its sugar exports and mainly Brazil is benefiting from this situation. This 700,000 hectares can be used for growing wheat or corn for ethanol production. It would not impact on land outside the EU, nor commodities for food use.
According to the Food and Agriculture Organization of the United Nations, the EU is taking 500,000 hectares of arable land out of production each year. Yet, it seems that this is not enough; another 7 million hectares should be taken out of production to boost green farming. At least that is what the European Commission proposed as part of another reform of Europe’s agricultural policy.
All in all, Europe seems to have too much land. In any case, there certainly seems to be enough land to produce biofuels and at the same time reduce the protein deficit via distillers grains.
These land facts, plus the EPA decision, should have an impact on European politicians who are gifted with common sense thinking. The EPA has set a clear example and the EU should follow.
In any case, Europe’s plan to limit conventional biofuel, and even prevent its production beyond 2020, will not change America’s view on its biofuel policy. America’s ethanol is needed to reduce America’s addiction to oil and to become less dependent on the Middle East—considerations Europe doesn’t yet care about.
Author: Robert Vierhout